During earnings season last month, did you wonder if dividends were a bit lower than usual?
Well, you're not imagining things.
According to Betashares estimates, the average dividend yield of the S&P/ASX 200 Index (ASX: XJO) has fallen to just over 3.3% per year.
That's well below the long-run average dividend yield of 4% to 4.5%, and it's mainly due to lower payments from banks and miners.
Betashares senior investment strategist, Cameron Gleeson, says:
Australia's reputation as a high dividend-market rests heavily on the shoulders of the big banks and miners.
Recently, this dependence has started to threaten the sustainability of the overall market dividend yield.
Over the last two years, dividends at an index level have been falling as the earnings yield has taken a hit.
So, where do you go for strong dividend income when the banks and miners aren't delivering the goods anymore?
If you're an individual stock picker, you can find some inspiration on which ASX dividend shares to buy in FY26 here.
Alternatively, you might like to consider an ASX exchange-traded fund (ETF) that is focused on high dividend yields.
Let's take a look at two of your options.
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2 ASX ETFs with dividend yields well above market average
Vanguard Australian Shares High Yield ETF (ASX: VHY)
With $56.3 billion in funds under management, VHY is the largest dividend-focused ASX ETF on the market.
VHY ETF delivered a total return of 14.88% in FY25, meaning it outperformed the ASX 200, which had a total return of 13.81%.
The VHY ETF seeks to track the performance of the FTSE Australia High Dividend Yield Index before fees.
This involves 75 companies, 70% of which are ASX 200 large-cap stocks, and real estate investment trusts (REITs) are excluded.
VHY ETF's top holdings are currently BHP Group Ltd (ASX: BHP) shares at 10% of monies invested, Commonwealth Bank of Australia (ASX: CBA) at 9%, Westpac Banking Corp (ASX: WBC) at 7%, National Australia Bank Ltd (ASX: NAB) at 7%, Telstra Group Ltd (ASX: TLS) at 6%, ANZ Group Holdings Ltd (ASX: ANZ) at 5%, and Woodside Energy Group Ltd (ASX: WDS) at 5%.
Vanguard explains this ASX ETF's purpose:
The ETF provides low-cost exposure to companies listed on the Australian Securities Exchange (ASX) that have higher forecast dividends relative to other ASX-listed companies.
Security diversification is achieved by restricting the proportion invested in any one industry to 40% of the total ETF and 10% for any one company.
Over the past five years, VHY ETF has delivered an average annual total return of 15.74% before fees and 15.45% after fees.
Over the past 10 years, it has produced an average annual total return of 9.89% before fees and 9.61% after fees.
The annual management fee is 0.25%.
Betashares S&P Australian Shares High Yield ETF (ASX: HYLD)
Betashares launched this new dividend-focused ASX ETF just last month. It currently has $37.5 million in net assets.
The HYLD ETF seeks to track the returns of the S&P/ASX 200 High Yield Select Index before costs.
This involves 50 companies.
HYLD ETF's top holdings are currently Westpac shares at 11% of monies invested, NAB at 11%, ANZ at 10%, BHP at 9%, Wesfarmers Ltd (ASX: WES) at 6%, Macquarie Group Ltd (ASX: MQG) at 5%, and Telstra at 5%.
Betashares explains this ASX ETF's point of difference:
HYLD seeks to improve on traditional high-dividend strategies by aiming to screen out potential 'dividend traps' such as companies projected to pay unsustainably high dividend yields, as well as companies that exhibit high levels of volatility relative to their forecast dividend payout.
A dividend trap is a stock with an unusually high dividend yield that is not sustainable. It often occurs because the stock price has fallen.
We can't share any long-term performance data with you on HLYD ETF given it has only just begun trading on the ASX.
However, the index that it tracks has been around since 2011. So, let's take a look at that.
Over the past 5 years, the S&P/ASX 200 High Yield Select Index has delivered an average annual total return of 16.17%.
Over the past 10 years, it was 10.1%.
The management fee is 0.25% per year.
